UTC Reports Q1 Earnings
22 April 1998
UTC Reports 20% Increase In First Quarter Earnings Per Share
HARTFORD, Conn., April 22 -- United Technologies Corporation
reported first quarter diluted earnings per share of $1.04, up 20
percent versus $0.87 in the prior year. Net income was $260 million, 16
percent above the $224 million reported in 1997.
Revenues for the first quarter were $6.1 billion, 3 percent higher than
the prior year, reflecting revenue growth at Pratt & Whitney and Carrier,
partially offset by lower revenues in other business segments.
At constant foreign currency rates, earnings per share would have been
$0.02 higher than reported and revenues would have increased 6 percent versus
1997.
Available cash flow was $330 million, comparable with last year's
$345 million, despite higher customer financing requirements. At the end of
March, net debt was $860 million and net debt to capital was 17 percent,
compared with $480 million and 10 percent, respectively, a year ago. Debt to
capital ended the quarter at 27 percent.
George David, Chairman and Chief Executive Officer said, "We had a strong
start to 1998, with 20 percent earnings per share growth and continued healthy
cash flow despite weakness in Asia and restructuring actions to improve the
long term profitability of our commercial businesses. We remain confident that
we will meet our earnings expectations for 1998."
Acquisitions totaled $241 million in the quarter, including Hamilton
Standard's purchase of the French aerospace company Ratier-Figeac and
Carrier's investment in Concepcion Industries Inc., the Philippines' leading
air conditioning manufacturer.
UTC repurchased 1.0 million shares of common stock for $89 million in the
first quarter.
First quarter operating profit included restructuring charges at Carrier
and Otis, which more than offset a gain at Pratt & Whitney resulting from the
settlement of a contract dispute with the U.S. government.
Excluding this gain, Pratt & Whitney's operating profit increased more
than 20 percent on 7 percent revenue growth, principally due to continued cost
reductions and productivity improvements. Pratt's revenue improvement
reflected higher engine shipments, increased government development revenues,
and growth in the commercial engine overhaul and repair business.
Carrier's operating profit declined $52 million on
8 percent revenue growth, reflecting charges to restructure Carrier's rotary
chiller business and reduce costs in its Asian and European operations.
Excluding these charges, Carrier's operating profit and margin increased
versus 1997, as performance improvements in the transport refrigeration
business and Europe and the impact of recent acquisitions more than offset
continued weakness in Asia.
Otis' operating profit declined $33 million on 3 percent lower revenues,
due to charges to consolidate engineering centers and manufacturing facilities
and to further reduce Otis' overhead cost structure. Prior to these charges,
Otis' operating profit and margin increased versus 1997 as improvements in
Europe and the Americas more than offset a decline in Asia and unfavorable
foreign currency translation.
Automotive's operating profit increased 58 percent despite a 2 percent
revenue decline, due to performance improvements in all businesses.
Flight Systems' operating profit declined 8 percent on a comparable
revenue decline, as continued revenue and performance improvements at Hamilton
Standard were more than offset by lower volume at Sikorsky due to the timing
of helicopter deliveries.
United Technologies Corporation provides a broad range of high technology
products and support services to the building systems, automotive, and
aerospace industries.
This earnings release includes "forward-looking statements" that are
subject to risks and uncertainties. For information identifying economic,
political, climatic, currency, regulatory, technological, competitive and some
other important factors which may affect UTC's operations, products and
markets and could cause actual results to vary materially from those
anticipated in the forward looking statements, see UTC's SEC filings as
updated from time to time, including, but not limited to, the discussion
included in the Business section of UTC's Annual Report on Form 10-K under the
headings "Description of Business by Industry Segment" and "Other Matters
Relating to the Corporation's Business as a Whole."
United Technologies Corporation
Condensed Consolidated Statement of Operations
(Unaudited)
(Millions of Dollars, except per share amounts)
Quarter Ended
March 31,
1998 1997
Revenues
Otis $1,322 $1,368
Carrier 1,498 1,387
UT Automotive 729 741
Pratt & Whitney 1,916 1,719
Flight Systems 676 735
Corporate items and
eliminations (30) (16)
6,111 5,934
Cost and Expenses
Cost of goods and
services sold $4,612 $4,536
Research and
development 308 271
Selling, general and
administrative 731 702
Interest 49 48
5,700 5,557
Income before
income taxes and
minority interests $411 $377
Income taxes 131 124
Minority interests 20 29
Net income $260 $224
Per Share of Common Stock:
Earnings
Basic $1.10 $0.91
Diluted $1.04 $0.87
Dividends $0.31 $0.31
Average shares
(in thousands):
Basic 229,416 237,396
Diluted 248,811 256,236
See accompanying Note to Condensed Consolidated Financial Statements.
United Technologies Corporation
Segment Revenues and Operating Profit
(Unaudited)
(Millions of Dollars)
REVENUES
Increase(Decrease)
1998 1997 Amount Percent
Quarter Ended March 31,
Otis $1,322 $1,368 $(46) (3)%
Carrier 1,498 1,387 111 8 %
UT Automotive 729 741 (12) (2)%
Pratt & Whitney 1,916 1,719 197 11 %
Flight Systems 676 735 (59) (8)%
OPERATING PROFIT
Increase(Decrease)
1998 1997 Amount Percent
Quarter Ended March 31,
Otis $98 $ 131 $(33) (25)%
Carrier 18 70 (52) (74)%
UT Automotive 49 31 18 58 %
Pratt & Whitney 293 182 111 61 %
Flight Systems 65 71 (6) (8)%
OPERATING PROFIT MARGIN
% Point
Increase
1998 1997 (Decrease)
Quarter Ended March 31,
Otis 7.4% 9.6% (2.2)
Carrier 1.2% 5.0% (3.8)
UT Automotive 6.7% 4.2% 2.5
Pratt & Whitney 15.3% 10.6% 4.7
Flight Systems 9.6% 9.7% (0.1)
See accompanying Note to Condensed Consolidated Financial Statements.
United Technologies Corporation
Condensed Consolidated Balance Sheet
(Millions of Dollars, except ratios)
March 31, December 31,
1998 1997
(unaudited)
Assets
Cash and cash equivalents $703 $755
Accounts receivable, net 4,090 3,789
Inventories and contracts
in progress, net 3,307 3,173
Other current assets 1,499 1,531
Total Current Assets $ 9,599 $ 9,248
Fixed assets, net 4,129 4,262
Other assets 3,612 3,209
Total Assets $17,340 $16,719
Liabilities and Shareowners' Equity
Short-term debt $308 $340
Accounts payable 1,984 1,978
Accrued liabilities 5,400 4,993
Total Current Liabilities 7,692 7,311
Long-term debt 1,255 1,275
Other liabilities 3,705 3,610
ESOP Convertible Preferred
Stock, net 452 450
Shareowners' Equity:
Common Stock 2,569 2,488
Treasury Stock (2,560) (2,472)
Retained Earnings 4,725 4,558
Currency and pension
adjustments (498) (501)
4,236 4,073
Total Liabilities and
Shareowners' Equity $17,340 $16,719
Debt Ratios:
Debt to total capitalization 27% 28%
Net debt to total capitalization17% 17%
See accompanying Note to Condensed Consolidated Financial Statements.
United Technologies Corporation Note to Condensed Consolidated Financial
Statements
(1) Certain reclassifications have been made to prior year amounts to
conform to current year presentation.
SOURCE United Technologies Corporation